Estate planning is the process of assessing and organizing your assets to ensure they are properly transferred and handed down to your loved ones upon your passing. It is seen as a nonnegotiable to many as it can significantly impact whether or not your wishes are upheld with the utmost care and attention after you are gone. Without proper estate planning, control over your assets is not your own anymore, which could lead to your family not getting what you wished for them. So, let’s start from the beginning at step one of estate planning and get you prepared.
Step One: Create an Inventory
Some might assume estate planning is unnecessary for them, but you would be surprised just how much you own in both tangible and intangible assets. For example, you will want to create an inventory of tangible assets such as real estate, vehicles, collectible art or other items, furniture, or additional personal items that you want to go to the right person. Then, regarding intangible assets, you want to inventory things such as checking and savings accounts, retirement plans, stocks, bonds, mutual funds, health insurance plans, and ownership of a business. Additionally, you don’t want to forget digital assets such as usernames and passwords, Bitcoin, documents, or downloaded photos.
Step Two: Set Up Legal Directives
Then, you want to establish your power of attorney, medical power of attorney, and financial power of attorney. While these could all be the same person, it is essential to have someone dedicated to this position so you are protected and spoken for in the instance that you become incapacitated and need medical or financial decisions made on your behalf. This person(s) should be someone you trust and understand what you want in times like this.
Step Three: Gather Up the Necessary Documents
Writing up and gathering the necessary documents is not only for you but also for your family and loved ones. Firstly, a last will and testament will ensure that your wishes are listened to during probate and that your family does not have to assume what you would’ve wanted. You can control where your assets go after you are gone. You can also write up a living will that will outline the medical care you do and do not want down the line. Additionally, gathering information on your life insurance and ensuring you have enough is essential during this time. This is also your chance to write up guardianship for your children if they are still young and will need to be taken care of.
Step Four: Consider Trust Options and State Taxes
Opening a trust can be an excellent way to ensure your assets are protected during and after your life while having someone listed as a beneficiary to handle them if something were to happen. A revocable trust allows you to assign a trustee to your assets and gives you the opportunity to change or alter terms or beneficiaries, while an irrevocable trust can not. This moves into the mindset of assessing your state’s taxes. Certain trusts can help avoid taxes, but no matter what, you want to consider your state’s inheritance and estate taxes when writing up wills, trusts, and gifts to ensure you save as much as you can for yourself and the beneficiaries.
Step Five: Plan to Reassess Regularly
Estate planning is not a one-and-done event. You can start planning when you are 21 or 61, but no matter the age, it is important to reassess your plans every year to ensure they align with your way of life and current ideals for after you are gone. Choosing trusts that you can alter can ensure you can change your mind, but no matter what, you want to ensure you are not cornering yourself into choosing certain planning preferences with no way out of them.
Most Importantly, Remember…
And most importantly, when estate planning, remember you do not need to broach the subject alone. Before you even start creating your inventory of assets, find an estate planning attorney to work with you through the process to ensure you are not missing crucial steps or digging yourself or your family into a hole. Additionally, a financial advisor can be a great resource to have during this time to ensure you are correctly evaluating your financing through this process.
Before you take your first step to estate planning, find an attorney to work by your side. If you have questions or want to start the process, contact the team at Hartmann Law.